- POSTED: 28 Feb 2014 21:59
The US economy grew at a slower pace late last year than previously thought, largely due to weaker consumer spending during the holiday shopping season, official data released on Friday showed.
WASHINGTON: The US economy grew at a slower pace late last year than previously thought, largely due to weaker consumer spending during the holiday shopping season, official data released on Friday showed.
The Commerce Department cut its estimate of gross domestic product growth in the final quarter to an annual rate of 2.4 percent, from an initial reading of 3.2 percent.
Analysts had expected a somewhat smaller GDP revision to a 2.6 percent pace in the final quarter, which began with the negative effects of the government shutdown in October and ended with disappointing holiday retail sales in December amid extreme winter weather.
The world's largest economy grew at a robust rate of 4.1 percent in the third quarter but significantly lost momentum as it entered 2014. Since then, a batch of economic data has been disappointing in January and February as severe winter weather gripped much of the country.
"Growth is slowing a bit from the inventory-juiced pace of late last year, but the main culprit is winter weather, which is weighing heavily on activity," said Scott Hoyt of Moody's Analytics.
"Nothing fundamental has changed in the past few months to suggest that growth will remain sluggish for long."
Most of the downward fourth-quarter revision of 0.8 percentage point came from smaller than first estimated growth in consumer spending, which drives the bulk of US economic activity. Personal consumption expenditures (PCE) were revised down to 2.6 percent from the prior estimate of 3.3 percent.
Other factors were downward revisions to private inventory investment, exports and state and local government spending.
Despite the lowered fourth-quarter number, the US economy still grew a solid 3.25 percent in the second half of 2013.
For all of 2013, GDP increased by 1.9 percent, down from a 2.8 percent rise in 2012.
Inflation remained tame in the fourth quarter, well below the Federal Reserve's 2.0 percent target.
The PCE index, the Fed's preferred inflation indicator, dipped to 1.0 percent from 1.1 percent in the third quarter. The core PCE, excluding food and energy prices, was unchanged at 1.2 percent.